Successor to XP. Supposed to introduce a much simplified user interface API called Avalon, that will be at the core of Longhorn's new "inductive" interface, likely to build heavily on XML.
Also includes a new service: WinFS (Windows Future Storage), running on top of NTFS (or FAT32?). WinFS was earlier rumoured to be a filesystem.
Longhorn may or may not be released as server version. Said to include support for DirectX Shader Model 4.0.
The latest info indicates that WinFS and Avalon will been jettisoned from Longhorn for it to be ready for launch in 2006. The dropped features will then be queued for possible future introduction.
One rumour earlier claimed that it would be named 'Microsoft Windows e-XPedition'.